Choose a tax service

When setting up your taxes for the United States, you can choose the tax service that works best for your business. You can select Shopify Tax, Basic Tax, or Manual Tax to calculate and collect taxes from your customers at checkout. You can change which tax service you use at any time.

Starting January 15, 2023, only Shopify Tax will be updated with new features. The Basic Tax and Manual Tax services will continue to work and receive tax rate updates, but they won't receive new features.

Review the following table to determine which tax service is best for your needs.

Table outlining the features of tax services
Shopify TaxBasic TaxManual Tax
Sales tax calculation
Automatic rate calculations using tax registrations
Automatic rate calculations using product categories
Automatic recommendations for product category
Rooftop accuracy
Support for state fees
Tax holidays
Markets Pro
Reporting and insights
Tax reports
Tax liability insights
Advanced reports
Exemptions and overrides
B2B tax exemptions
Customer tax exemptions
Manual tax rate overrides
Collecting tax in states with no state sales tax

Choose your tax service

After you review the features and considerations for each tax service, you can choose the service that you want to use.

Steps:

  1. From the Shopify admin, go to Settings > Taxes and duties.
  2. Click United States.
  3. In the Current tax service section, click Manage.
  4. Select the tax service that you want to use, and then click Activate.

If you select Basic Tax as your tax service, then your store will continue to use Shopify Tax for free until January 15, 2023. After January 15, 2023 your store will automatically switch to Basic Tax, or remain on Shopify Tax depending on which tax service you choose.

Registration-based tax collection

Taxes are automatically collected for states where you have a registered tax liability.

Rate calculation using product categories

Tax exemptions and modifications are calculated automatically based on the category of the product.

Automatic recommendations for product categories

Product categories are automatically suggested for your products.

Rooftop accuracy

Rooftop accuracy means that taxes are calculated precisely according to street address, rather than being limited to zip codes. This feature is included in only Shopify Tax.

Support for state fees

Some states collect tax-like fees. For example, in Colorado, orders containing taxable goods that are delivered by a motor vehicle in Colorado are subject to a $0.28 non-refundable retail delivery fee. This feature is included only in Shopify Tax.

Tax holidays

Special tax rates that apply on specific dates are automatically calculated. For example, Texas has a sales tax holiday from August 5-7 each year. This feature is included in only Shopify Tax.

Markets Pro

Only Basic Tax or Shopify Tax support Markets Pro. You can't use Manual tax with Markets Pro.

Tax reports

Enables you to access reports that show the amount of taxes you've collected.

Liability insights

Automatic suggestions and insights on your potential tax liabilities are provided based on where you ship and sell to.

Advanced reports

Advanced tax reports have additional details about the amount of tax you collect, and can be used to help you file with tax authorities.

B2B tax exemptions

Enables you to sell licensed products that are tax-exempt.

Customer tax exemptions

Enables you to designate that specific customers are tax-exempt.

Product and shipping tax overrides

Assign product tax overrides or shipping tax overrides to apply specific tax rates that override any other tax calculations for selected products or shipping destinations. Overrides can only be applied at the state level for Manual Tax.

Collecting tax in states with no state sales tax

Enables you to collect tax in states that have no overall tax rate. For example, if you're in New Hampshire and you sell food that's prepared and consumed on-site, then you might need to apply a 9% tax rate.

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